How Greatly Will Health-Care ReformImpact Benefits Practices of P&C Firms?PPACA inspires more questions than answers

BY MARK E. RUQUET

THE PATIENT Protection and Afford- able Care Act (PPACA) will not be fullyimplementeduntil 2016, butthe
health-care reform law is already having
an effect on agents and brokers’ employee-benefits business—and many agents are
growing concerned over what their future
role will be in this insurance segment.

Mandated to spend between 80 and
85 percent of their premium dollars on
patient care under the minimum medical
loss ratio (MLR) provision of the law, many

Selling health insurance as a one-man band is hard enough. Add on top
of that having the commission reduced
from the carrier, and it becomes a hard
equation to solve unless the agency can
get fees for their services.”

Dave Evans, Executive Director, Trusted Choice

will be left out of the mix—substituted for
by unlicensed specialists or the Internet.

producers fear health-care carriers will cut
their commissions sizably to reach that
cap, making it increasingly difficult for
agents to earn a living.

Indeed, reports have begun to arrive that
some carriers have already begun cutting their
commissions to achieve MLR compliance.

For a property-and-casualty agency
with an established employee-benefits
department that includes the sale of health
care as part of its cross-selling strategy,
the commission amount can make the
difference between a profitable business
venture and just another loss-leading,
value-added service to clients.

In addition to their anxiety over getting
squeezed on commissions, producers who
have long acted as trusted advisors also are
concerned that they might get excluded
entirely from the health-care transaction.

With the creation of state-based health-insurance exchanges to fulfill the needs of
every individual, agents are worried they

NEXT STEPS

For some agencies, the response to the
potentially grim consequences of PPACA
is to wind down their employee-benefits
business altogether. Smaller firms,
especially, are likely to have a tough go of
it in the new, post-PPACA world.

While large shops have the advantage of
scale to remain profitable, a P&C agency with
just one or two agents qualified to sell health
insurance faces a significant challenge.

“Selling health insurance as a one-manband is hard enough,” says Dave Evans,executive director of Trusted Choice, theindependent-agent branding initiative of theIndependent Insurance Agents & Brokersof America. “Add on top of that having thecommission reduced from the carrier, and itbecomes a hard equation to solve unless theagency can get fees for their services.”

WHAT CAN AGENTS DO?E Seek more fee-for-service compensation.Become the client’s human resourcedepartment for benefits.E Voluntary-benefits programs can serveas a nice niche product to cover gaps inhealthcare coverage and bring in revenueE Form a benefit committee within theagency to examine the future and deter-mine the agency’s strategy for the futureSTATE OF AFFAIRS

Representatives at the state level of the
Professional Insurance Agents associations
of the states of New York, New Jersey,
Connecticut and New Hampshire are fielding
questions about the agent’s role in the sale
of health-care insurance if the customer
buys coverage through a state health-care
exchange, says Campbell H. Wallace, the
association’s government-affairs counsel.

Under PPACA, the exchanges will not
require licensed agents to sell health-care
insurance, and the fear is that the exchanges
could be set up to allow unlicensed
individuals to handle such coverage.
Unlicensed individuals may have the best